To prevent professionals from shying away from shouldering responsibilities of independent directors following the Satyam debacle, industry body CII on Sunday suggested that their liabilities should be limited as they are not involved in day-to-day running of a company.
"Liabilities of independent directors be distinguished and made less onerous than liabilities of the executive and non-independent directors, as independent directors are not involved in the day-to-day management of the company," the Confederation of India Industry (CII) said in a letter to a Parliamentary Standing Committee.
Commending the new Companies Bill, 2008, the industry body said the bill should be aligned with the listing agreement and other legislations of Sebi, like constitution of audit committee, definition of independent directors, promoters, key managerial personnel etc.
CII added there was a shortage of good independent directors in the country and the new Bill should ensure that capable people came forward to assume duties of independent directors on boards of various companies without fear.
The industry body also stressed the need for providing legal immunity to non-executive directors against criminal liability, as they could be held "vicariously" responsible for a criminal offence.
"A clause having over-riding effect should be incorporated in the Companies Bill to exclude non-executive directors from any vicarious criminal liability for offences committed by the company," it said.
With regard to the need for independent directors in closely held public companies and subsidiaries of public companies, CII said it should be prescribed only if the materiality and scale of operations of such companies warranted an independent look.